Self assessment - BTL property with no income

[Hornsey]

Can someone point me in the right direction please.

I have 1 BTL property that became vacant in February 2012. For various reasons it was then empty for the entire 2012/2013 tax year so there was no income, but I was still making mortgage payments and therefore mortgage interest. In June 2013 I moved into the property myself so it is no longer a BTL but was it still classed as one for the 2012/2013 tax year, and if so do I put the income from property as £0 and the loan interest as £xx? Or do I simply say that I had no income from property and therefore not fill in that section?

I appreciate a lot of people will be asking for free advice at this time of year but I can't seem to find the answers to my particular situation in any online guides or on the HMRC website.

Any advice will be greatly received.

[Sir Bagalot]

So why wasn't it let between Feb 12 and June 13? Were you doing a refurb prior to you moving in? If so then it ceased to be a BTL in Feb 12.

[Eric Mc]

Did you incur rental related costs during the period when there were no tenants?

Were you trying to find tenants during that period?

Did you carry out any regular maintenance or upkeep of the property during that period?

Did you advertise or seek tenants in that period?

Just because there were no tenants in it does not mean it had stopped being a rental property.

[BoRED S2upid]

If its still a rental property you made a loss and would be entitled some cash back? its a business at the end of the day they makes losses as well as profits.

[Eric Mc]

BoRED S2upid said:

If its still a rental property you made a loss and would be entitled some cash back? its a business at the end of the day they makes losses as well as profits.

Tax reliefs on rental property losses are quite restricted.

Loss relief CAN be claimed in respect of losses incurred on a rental property. However, the loss relief is restricted to offset against other rental income in the same tax year or carried forward for offset against future rental income.

Unlike losses from a trading activity, rental losses CANNOT be offset against "other income" in the same tax year - so they cannot be used, for example, to recover tax already paid under PAYE.

Having said all that, even if a rental property generates no rental profits in a given tax year, it is likely in that case to have produced a rental loss (it is unlikely that the situation is precisely "Nil" or "break even").
It is therefore best practice and indeed a legal requirement to go ahead and submit the rental figures on the tax return - showing the loss - so that the loss can be carried forward to the next or subsequent tax years for offset against future rental profits.

Why throw away a tax relief you are perfectly entitled to claim?

[Hornsey]

Thanks for your input, it's all appreciated.

To answer a couple of questions, there were various reasons that the property was vacant for such a long period and I was considering whether to sell the property or rent it again. When my marriage broke down I moved into the property myself, but as I said, for the whole of the tax year in question it was empty.

[Hornsey]

Also, I was not advertising or actively seeking tenants in that time but was still considering the option of re-letting. Some maintenance was carried out.

[Eric Mc]

I'd definitely return it as a rental income property but showing a loss because of the maintenance costs. In that way, the loss gets carried forward for offset against future rental profits.

[Hornsey]

Thank you Eric.